'Bank Negara may raise interest rates on strong exports' [Business Times (Malaysia)]
(Business Times (Malaysia) Via Acquire Media NewsEdge) KUALA LUMPUR: ANALYSTS say strong exports numbers may prompt Bank Negara Malaysia to raise borrowing costs this week.
Wellian Wiranto of OCBC Bank said most encouragingly was the electrical and electronics sector.
"The bulwark sector of electrical and electronic products continued to show resilient strength , shipping RM21.2 billion of chips and such in May, compared to an average of 20.4 billion of the prior three months." Bank Negara will hold its next monetary policy committe meeting on Thursday.
There are increasing market expectations for the overnight policy rate (OPR) - a benchmark for banks to determine interest rates - to be raised after 17 meetings where it stayed pat.
Data released on Friday showed Malaysia's exports jumped unexpectedly in May, backed by a further bounce in electronic products.
Exports expanded by 16.3 per cent, surpassing market expectations. Imports also grew a faster 11.9 per cent while the trade surplus narrowed to RM5.7 billion.
"Year-to-date, Malaysia's export growth is outpacing that seen in the rest of EM Asia (in US dollar terms)," said Dr Chua Hak Bin, economist with Bank of Merrill Lynch.
"Surging exports and robust production provide room for Bank Negara to hike policy rate," he said, adding that the OPR is expected to increase by 25 basis points.
As for exports of commodities, he noted that the exports of palm oil and crude petroleum had advanced during the month.
Malaysia's exports to major markets had registered double-digit growth rates in May, except for exports to China.
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